Etihad's 5 Star U-Turn

Abu Dhabi’s Etihad Airways took occupancy of the back page of The Australian’s Business Review last Friday to tell the paper’s readers that it’s “official – our service now comes with 5 stars”. A resplendent air hostess stands beaming under a quote from the Skytrax Audit Report, which describes how the airline’s premium rating is a “testament to innovation, high-quality service and comfort”.

Skytrax, for those who demonstrate a healthy disinterest in such aviation ranking exercises, is a UK-based consultancy, which runs reviews of commercial airlines and airports. You can read more about them here.

So, what’s the story? Well, Etihad didn’t used to be so enamoured with the Skytrax ratings; oh, no. They were the constant recipients of four Skytrax stars – even after new cabin products had been introduced – but alas, that fifth star remained out of reach. So much was the irritation at Etihad,   that the carrier announced its withdrawal from Skytrax, including its Audit and Awards, in 2014. As Skytrax pointed out at the time, the airline cannot opt to withdraw, as results are decided directly by customers, which is clearly Etihad’s good fortune as they crow with delight at finally achieving equal status with the likes of Garuda Indonesia and Hainan Airlines.

The Etihad situation does beg the question, how much is an award worth to its winners? That is a question that’s clearly open to interpretation – does Bob Dylan’s Polar Music Prize win carry as much value for the performer, as his recent Nobel Prize success? We can hazard a guess.

It is, though, a question that needs to be asked from a corporate perspective in view of the amount of energy that’s being expended in merely submitting the award entry, together with the growing sense of fatigue that surrounds some of those lesser accolades.

I won’t, however, let cynicism completely cloud my judgement, as I believe that awards to be a good thing from a number of perspectives. Firstly, they offer a vital benchmark for any organisation; a measure of collective progress. Then there’s the inherent recognition of the people involved, and of course, the brand awareness that comes with such plaudits. Lastly, the incentivising quality of such prizes to set even higher standards for the business, shouldn’t be overlooked – according to some, there’s a gulf between four and five stars, just ask Etihad.

 

 

 

 

 

 

 

Can hacking be good for us?

Dropbox – the cloud storage supplier – has been hacked. To be more precise, it’s just been reported that up to 68 million usernames and passwords were stolen back in 2012. Now, that’s a statement which probably bemuses the reader on two points; firstly, the scale of the breach, and secondly, the speed of the news – that’s 4 years ago. In fairness, the company made it known that they had been compromised in 2012, but the size of the incident had apparently been underestimated.

It’s said that Dropbox was completely unaware of the full extent of the attack, which leaves me in a flux – exasperated by their state of oblivion, while being gently encouraged by the fact that nothing has changed. As a Dropbox user (Darn, have I compromised myself?), I read the story with an air of resignation in light of the increasing regularity of such breaches – not just at Dropbox, I hasten to add. However, there lies the nub of the issue – my lethargic response, which is no doubt shared by others, is indicative of the consumer mindset that these attacks are a corporate problem and subsequently need corporate solutions. Not so, as corporate stakeholders we are all part of the problem and the solution. Specifically, the public’s attitude towards passwords is casual at best, with our encryption bordering on an ‘open door’ policy – Pass 1234 anyone?

Hack fatigue would appear to be setting in among the public, leaving them perilously indifferent to the issue. So what to do? In entering the spirit of Sydney’s Festival of Dangerous Ideas, maybe we need the castle defences to be brought down occasionally to best appreciate our enemy's strengths, and give priority to investing in bigger and better walls. Only when we have a full grasp of the impact, will we recognise the threat.

Disrupting the Disruptors, or How to Grab an Uber

The combative tone of Anthony Tan’s message to his troops this week got me thinking about market differentiation. Let me explain – Tan runs Grab – a taxi app from Singapore, and he was in fighting mood following Uber’s decision to sell off its China business. Uber has “lost once, and we will make them lose again”, proclaimed Tan. You can read more here

The pugnacious tone of Tan’s words sounded familiar I thought, but why? Of course, it was Uber-speak. The online transportation giant, which counts ‘fierceness and super pumpedness’ as qualities to develop in its people, has being demonstrating a ruthlessness to business since its inception. I suspect that approach will soften, but in short, it’s a tone that’s owned (for want of a better word) by Uber. So, why Tan’s hawkish words?

I could set up an argument for Uber having set the dominant corporate tone-of-voice for the sector, which Tan taps in to, but that’s a hard one to prove. No, my argument is that Tan appears to have missed a trick in not positioning his business away from Uber’s apparent alpha-male sensibilities. There’s room to pitch the brand effectively enough to demonstrate a point of difference, while still achieving growth. Women, for one, need to be a big part of any brand proposition and not from just a customer perspective. Ditto, the communal aspect of the service they offer; in short, the community building.

In light of Uber’s global-reach tentacles, there’s also differentiation in the concept of local, but I guess there lies the nub – why stay local, whey you have an application that can work anywhere and have competitors who are doing exactly that? Well, we may just want to go back to where we started and Uber’s decision to pull out of China – for success may be about recognising the limits of your ride.  

 

A Soldier's Guide to Managing Uncertain Times

Firstly, let me apologise for not being strong enough to withstand the pull of the Brexit black hole. It was out there and reams have been written and will continue to be written, but not by me I said. Well, that was my position, but I have succumbed.

However, if any respite can be offered, this is no place for the micro, or macro-economic, or further speculation about Scottish independence. No, in what sounds like an Absurdist argument, I’ll try to flesh out the challenges of organisational uncertainty.

What with the disruptive nature of technology, the lingering legacy of the GFC and the widespread rejection of mainstream party politics, It’s been said (by far too many) that we live in uncertain times, and now the UK’s decision to leave the European Union has exacerbated the sense of limbo being felt by corporates and consumers.

So, how best for corporate leaders to manage this ‘fog of war’? Fittingly, I believe military thinking to be an invaluable starting point. To expand, former CIA Director and General, David Petraeus once spoke of his frustrations of live fire arms exercises within the US Army, which were too “carefully scripted” and resultantly lost any spontaneity – you can read more here. I hasten to add that I don’t endorse executive team shoot-outs, but I believe there’s much to be learnt from an unannounced simulation exercise for team members. Clearly, such sessions are carefully choreographed and planned behind-the-scenes, but participants should very much feel ‘down in the deep end’. In extending another of Petraeus’ thoughts, it’s also vital that these exercises are now far more inclusive of more middling and junior ranked employees. To Petraeus’ words, the “decision making needs to be pushed outwards and downwards, towards where new information is originating.” Those more junior members of the team have, for instance, for more affinity with the subversive nature of technology; they know what it can do and have less in the way of reverence for those institutions that stand to lose, or gain from its application.

The military factor should also be explored by way of the war game - a cornerstone of combat strategy for the past 200 years. In contrast to the conventional simulation, the exercise is far more adversarial in nature, with your executive decision makers lining up against a team of competitive adversaries in terms of a given scenario, where every action is met by a reaction. Again, this is about leaders having to take the initiative and manage uncertainty actively.

By our very nature, we as rational animals, look to make decisions based on information; we put off difficult choices by requesting more information, and in an age of big data, there’s no shortage of content to turn to. However, there lies the potential for even greater paralysis and the overriding paradox of the Information Age. The statistics are useful, but let’s not lose sight of the need for strong instinctive leadership. 

Johnson & Johnson's Baby Powder Blues

Johnson & Johnson’s widely praised response to a product tampering crisis in the early Eighties has been long held-up as the pinnacle in effective reputation management. You can read a lot more here.

I mention the business as they are back in the news last week; The Australian’s ‘J&J hit with $170 million damages in talc cancer cases’ headline captures the situation rather bluntly. To summarize, separate juries in the United States awarded two women a total $127 million (USD) in damages as the company’s iconic baby powder was deemed to have been to blame for the plaintiffs developing ovarian cancer.

The story throws up a number of intriguing points; firstly, the legal system’s effect on the notion of truth. Absoluteness in terms of the facts is becoming a lot harder to attain when subjected to the vagaries of a court process; for instance, two courts found for the women, while a third (in 2013) decided the firm was negligent, but didn’t award damages. However, all of this stands in contrast to the company’s “thirty years of medical expertise” which supports the powder. Secondly, there’s the question of who best to rebuild trust in the product among consumers? Typically, this sort of assurance would be offered by appropriate health professionals; generally, doctors. For many, though, such figures are seen as a little too close to industry; part of the problem, as opposed to the solution, possibly. So, would this fall more comfortably within the realm of celebrity endorsement – a discerning mother figure seen elbow-deep in the white stuff? You get the gist. Lastly, the case highlights the importance of external agencies to support organisations over the long-term with such issues. Specifically, it is alleged that Johnson & Johnson “was concerned about the association between talcum powder and ovarian cancer…since the Seventies”. If that was the case (and it’s a big ‘if’), it’s vital to have a agency in place to manage the issue – the matter can be transplanted to a suitable host to carry out all the required pre-crisis preparedness that’s critical for these occasions. Such work can’t be done with any great satisfaction inside the business due to the inherent politics, and the sensitivity of the matter invariably gets in the way of having a full-blown planning strategy – the ‘hush hush’ effect is not good for engendering trust within an organisation, so why not have the matter managed and nursed off site?  

Why not let the army handle the Sydney siege?

The coronial inquest into the 2014 Sydney siege at the Lindt Café, which led to the tragic death of two hostages heard how the Australian Army had contacted the NSW Police and offered their assistance to best resolve the situation. The offer was turned down to the apparent dismay of some within police ranks – you can read more here.

Clearly, the situation is a hugely difficult one involving high-pressure judgments, but in light of the fact that army commandos had actually carried out an exercise in the vicinity of the siege, only a month earlier and have far more experience of combat in close-quarters than their police counterparts, why didn’t the police cede control?

Well, there lies the clichéd $64 million question and as is usual with a drama of many moving parts, the reasons are undoubtedly, many. One unnamed ADF (Australian Defence Force) source talked of “police pride” getting in the way, which unsurprisingly won’t be substantiated by the police. What can’t be argued, however, is the way such an approach – had it been taken up – would have been perceived by the public. Quite simply, as laymen, we put the army on a higher footing in terms of brute force than we do the police, as they have the scale in weaponry to justify such a notion; greater firepower though means greater threats. It would be a brave political leader to order the troops on to the streets of Sydney when the country was not at war. The impact on such images around the world would seriously damage the tourist revenue stream.

Yet, if the aim of the inquest is to get to the truth and apply some painfully learnt lessons to ensure the future safety of Australian citizens, it’s only right that we explore the army option more fully. Firstly, are we not already at war? Malcolm Turnbull has talked recently of broadening the war against terrorists, while predecessor, Tony Abbott’s readily referenced the threats to national security posed by terrorism. If that’s the story, why not keep to it? Secondly, the Coalition Government is viewed by the public as the most trusted to handle national security, so why not go the full ‘nine yards’ and leave them with a reminder they’ll find hard to forget?

As the tourist operators and the politicians know, the answer is fear. We may be able to render greater control through the army, but their presence would be greatly unnerving to the public. Fear is an incredibly powerful emotion, which tends to stay in our memories for an inordinate amount of time, which is no accident. Daniel Kahneman in his fantastic, ‘Thinking, Fast and Slow’ details the dominance of negative outcomes over positive ones in human psychology. As he says, “threats are privileged above opportunities, as they should be.” Fear is closely aligned to these threatening feelings. The respected Lowy Institute recently revealed that only 24% of Australians feel “very safe” – you may question the definition, but you get the gist; relatedly, the think tank also found the majority of respondents – 55% of Australians – believed the country’s participation in fighting ISIS only increased the risk of terrorism at home. As Kahneman also knows very well, statistics offer a far more accurate rendition of reality than the way we feel. The chances of us being the victims of terror groups are unbelievably slim; however, as political leaders know, our emotions get in the way and if the people are feeling scared, political change will undoubtedly follow. 

Trolley collectors of the world unite!

It’s a classic case of ‘David versus Goliath’ – in one corner, Coles – one of Australia’s biggest supermarket chains; in the other, the often overlooked men and women who collect their trolleys. You can read more here.

In summary, the giant was slain (okay, I’m going too far with the metaphor); in fact, the supermarket was penalised by the Fair Work Ombudsman (FWO) for the “gross underpayment” of these workers. I chose that last word – ‘workers’ - carefully, as it goes to the heart of the matter. Essentially, the Coles defence rested on the idea that the trolley collectors were contractors and not direct employees. So, they could – in the words of the FWO’s Natalie James – “wipe [their] hands of the problem.” Not so; Ms James was unequivocal in her agency’s appetite to address big business’ exploitation of workers. Her words – “we will look up to the business at the top” – will leave corporate boardrooms with no doubt where the responsibility for such elaborate supply chains lie.

The episode is also a notable case of issue mismanagement; to clarify, issues are those situations which if left unattended have the potential to significantly affect a business – I would suggest that workers underpaid to the tune of six-figure sums is significant. In fairness, it has to be said that Coles has back-paid the workers in question and established a $500,000 fund for others who could also have been affected. 

However, the developments clearly illustrate the seemingly unrelated nature of issues – in that they are not related to us, so we don’t need to worry about them. This is an important point as it should challenge the commonly held mindset among senior teams that reputation management is exclusively about what we as a business do – our people, our products, our prices. Yet, the people who also carry out duties under our name as third parties are rashly overlooked. It’s a point that was writ large following the BP response to the blowout on the Transocean owned Deepwater Horizon and should have been enshrined across the collective executive, but it would appear that memories are short and to that end, reminders will continue to be painful. 

The London Whale Never Stood a Chance

The London Whale has spoken. More specifically, Bruno Iksil, the trader behind the wonderfully evocative nickname and the man at the centre of the JPMorgan Chase multibillion-dollar trading loss in 2012 has broken his silence about the whole affair - you can read more here.

In a comprehensive three page letter sent to the media, Mr Iksil sets out his side of the story and in doing so, points squarely to the door of his former employer as the engineers of the whole debacle. The trader writes that he was made a scapegoat for trades that were “initiated, approved, mandated and monitored” by senior management. JPMorgan Chase, have (at time of publication) made no comment, I hasten to add.

Mr Iksil goes on to say that the losses “were not the actions of one person acting in an unauthorised manner [and] for no good reason, I was singled out by the media.” Now, despite the losses, Mr Iksil is it’s assumed a very smart man to have made it to such rarefied heights in one of the biggest banks in the world. He clearly knows far more about banking than I do, but it’s apparent that he doesn’t know much about the media. Let me, pass Mr Iksil’s comments by you again – “for no good reason, I was singled out by the media”. Mr Iksil, you were always going to be singled out thanks to that nickname - the London Whale. It’s a label which, unsurprisingly, the trader resents and apparently borne of the size of the bank’s bets in corporate-debt markets. But that doesn’t matter; the media had their man. Trading is a complicated business, which leaves most audiences cold – you try explaining derivatives and credit-swap indexes over breakfast (or any other meal).

Quite simply, the media thrives on conflict, which results in victims, and with victims come villains. This is not to judge Mr Iksil, but to illustrate the point. The global financial crisis had shown that there was something rotten in the state of banking and to that end, those deemed culpable needed to be held up by the media.

The ‘London Whale’ hints at a corpulent, greedy culture which so resonates with the public when it comes to perceptions of the banking industry – the GFC’s Mr Creosote (see Monty Python), if you will. The name gave the media a face and personality (albeit wrong), which is a damn sight easier to engage with than corporate-bond defaults. So, you see Mr Iksil, singling you out may not have been fair, but it was always going to happen.

 

Framing Hillary Clinton

The results from the first US presidential nomination vote in Iowa were always going to be interesting, because it’s a largely entertaining group of runners who have made it to the starting line. Was the momentum built by Donald Trump going to continue, despite labelling the Iowans, “stupid” earlier in the campaign? What of freshman senator, Ted Cruz, and would the wheels of the Clinton juggernaut rock, or roll?

Now we know – a good night was had by Cruz, Marco Rubio and the veteran, Bernie Sanders, while it was a case of ‘could do better’ for the more prominent Trump and Clinton. Or was it? While, Trump’s underachievement is uncontested, other outcomes are far greyer when presented by the media. Specifically, how did Senator Clinton get on? In terms of the numbers, she shaded it from Sanders by .3 of a percentage point; that’s 49.9% versus 49.6%. She “struggled” according to the Australian Financial Review; she was “unnerved” in the Sydney Morning Herald and won on the “toss of a coin” in the UK’s Daily Telegraph.

However, the Clinton bandwagon knows politics to be a long and expensive game; crucially, it also knows the media very well and how it operates. More accurately, it knows how to frame the story. I allude to the concept of framing, which when applied to the media is primarily concerned with news outlets and how they give meaning to events is determined by the prominence they give to some aspects of the story over others. The Clinton clan is also acutely aware of the power of the image; ergo, pictures of a euphoric Hillary, Bill and Chelsea – this is the jubilation nation. Gone are the struggles and nerves; these are pictures that tell a different story – this is juggernaut unstoppable and these people are one thing, winners and we should all join in to feel the same way.

I’ve cited Gavin Esler’s ‘Lessons from the Top’ in this blog before and I do so again in relaying the story of television reporter Lesley Stahl, who looked to highlight Ronald Reagan’s “hypocrisy” in regards to public health schemes. Stahl used footage of Reagan visiting a nursing home to report the fact that the President opposed funding for such places. Following the broadcast, a White House aide called Stahl to say that they had “loved the piece”. Stahl had wondered if they had heard the piece correctly. The aide replied that they had heard every word, but that “nobody heard you”.  Fundamentally, the images of a doting Reagan with society’s marginalised far outshouted Stahl’s words. Hillary and the rest of the regiment know quite clearly that seeing is believing.

 

Death of a Spokesman?

Edelman has just published the latest findings from its ever-compelling Trust Barometer. The survey gauges public trust across a range of institutions, including governments, the media, NGOs and business. We always find it a great read and they generate a truck-load of coverage.

In keeping with the rest of agency-land, the ‘Employee Advocacy’ theme was writ large, and unsurprisingly, employees – that’s your ‘Ordinary Joes’ for want of a better form of words – were deemed incredibly trustworthy figures in regards to sharing company news. No real revelation here, in view of the fact that such people are unencumbered by the corporate baggage which thwarts more senior personnel from giving a relatively straightforward answer to a straightforward question. However, it’s a point that must not be overlooked, or denied by management teams; especially on noting that employees are the most trusted sources of information when it comes to “crisis handling”, “financial and operational performance” and “employee treatment”.  For far too many organisations, internal communications is a top-down process, which leaves the rank-and-file at best, indifferent and at worst, suspicious. As we’ve always counselled at CRP, employees need to be at the forefront of any organisational communications if management stand any chance of being heard.

What we found particularly interesting though was the plight of the official “media spokesperson”. To be precise, the company spokesman now ranks lower in terms of trust than ­all other stakeholders, including “activist consumers” and “academics” – essentially, the general public would trust outsiders more to give them accurate news about an organisation than the man, or woman on the inside who’s been tasked to tell them what’s happening. This, naturally, throws up some interesting questions – what, for instance, does that mean for media trainers, who pride themselves on developing polished corporate messengers? What of the individuals who are asked to play such roles – will they now think twice about the exposure to their own reputations? Do the findings signal the death knell of the official spokesperson? We find that unlikely, but what of the title – doesn’t the notion of spokesperson feel a little too regimented in the new, (flat) world order? As ever, we welcome your comments.